FIFA said in a statement that the so-called normalisation committee would organise elections for the Football Association of Indonesia (PSSI) leadership by the end of next month, stop a rebel league and run the association on a day-to-day basis.
The decision followed chaotic scenes 10 days ago when an assembly to organise the first PSSI elections in four years was called off after opponents of chairman Nurdin Halid stormed in claiming they had been stripped of voting rights.
Halid was jailed in 2007 for misusing funds but continued to run the PSSI from his cell.
"The FIFA emergency committee came...to the conclusion that the PSSI leadership had lost all credibility within Indonesia and was not in a position any more to lead the process to solve the current crisis," said FIFA in a statement.
FIFA added that the PSSI's lack of control was "proven by the failure to gain control of the breakaway league, set up without the involvement of PSSI, or by the fact it could not organise a congress whose sole goals were to adopt an electoral code and elect an electoral commission.
The normalisation committee would consist of Indonesian football personalities who would not be able to run in the PSSI positions and would act as an electoral commission, said FIFA.
"The mission of the normalisation committee is to organise elections based on the FIFA electoral code and PSSI statutes before May 21, to bring the run-away league under PSSI control... (and) to run the day-to-day activities of PSSI in a spirit of reconciliation for the good of the Indonesian football," it said.
Halid is in his second term as PSSI president but has faced growing criticism at the poor performances of Indonesian teams, especially the senior national side which is 129th in the world rankings.
The three-month old breakaway league has attracted teams from the PSSI-supported Indonesia Super League (ISL), a host of southeast Asian players and former England international Lee Hendrie.
Despite a huge football-mad population, Indonesia's only World Cup appearance was in pre-independence days in 1938 as the Dutch East Indies and is not recognised by the PSSI.
Indonesia have only played four times at the Asian Cup, going out at the first hurdle every time, and its clubs have never reached an Asian Champions League Final.
